Lenders give approval to latest phase of Cyprus bailout programme

May. 20, 2015, 9:14 am

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FRANKFURT (Reuters) – A periodic review of Cyprus’s bailout programme has been successfully concluded, the European Commission, European Central Bank and the IMF said on Wednesday, a key step for the country to take part in the ECB’s money printing programme.

“The main elements of these frameworks are now in place, which has allowed for the finalisation of the staff-level agreement,” the troika of international inspectors said in a statement, referring to an insolvency law.

The staff-level conclusion was subject to approval by the EU and IMF, which would be initiated shortly, the lenders said.

The conclusion of the review had been delayed because a law allowing banks to foreclose on mortgages had not been approved. That has since been signed off by parliament.

The conclusion of this review means that Cyprus can now qualify to participate in the ECB’s money printing programme to buy government bonds.

Cypriot officials have estimated that the ECB could purchase up to 500 million euros in Cyprus sovereign debt under the 1.1 trillion euro quantitative easing programme.

Cyprus, one of the euro zone’s smallest members, required an international bailout in early 2013 to shore up public finances and recapitalise local banks badly exposed to debt-crippled Greece.

Of the 10 billion euros in aid agreed, the Mediterranean state has to date tapped a little over 6 billion euros. Officials say the island may not require the entire bailout amount because of a better than expected economic performance.

(Reporting By John O’Donnell, additional reporting by Michele Kambas; Editing by Balazs Koranyi and Kevin Liffey)

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